What if a gilt spike retriggers UK pension margin calls?
A gilt-yield spike retriggering LDI margin calls is the self-reinforcing doom loop — forced pension selling pushes yields higher, triggering more calls, and the cleanest trade is short the long end until the BoE intervenes. Directly rhymes with the September-2022 gilt crisis that forced the BoE's emergency long-bond buying after the mini-budget. The transmission is leveraged LDI collateral; the forward twist is that post-2022 reforms raised collateral buffers, so the spiral should trip at a higher yield and clear faster — but the same plumbing remains, and global duration still catches the contagion.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 0–6 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A gilt-yield spike retriggers UK liability-driven-investment margin calls and forced pension selling. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Financial conditions ▲ · Real yields ▲ — which propagate through our causal graph to the markets below.